Tuesday, April 29, 2014

There is nothing fancy about these three solutions.I have covered rising income/wealth inequality for many years in dozens of entries. Since Thomas Piketty's new book has catapulted the topic into the media spotlight, it's a good time to list solutions that go deeper than Piketty's proposed global wealth tax--a proposal he characterizes as utopian.Every solution is utopian, because the Financial Aristocracy and their central bank cronies have democracy by the throat. There is no legislative way to change the Status Quo when political power is for sale to the highest bidder, and central banks are issuing nearly-free money to the financial oligarchy that owns the political machinery.But listing solutions is still important, because it reveals just how far from democracy, rule of law and free-market capitalism we have fallen. I have been describing various aspects of widening inequality in recent entries:America's Nine Classes: The New Class HierarchyA Critique of Piketty's Solution to Widening Wealth InequalityAre You an Elitist? Class Warfare and the New NobilityI propose three straightforward solutions that will systemically rectify wealth and income inequality.1. Rather than add taxes to fund more social welfare--in effect, placing a Band-Aid over the tumor--let's start by removing the source of rising inequality: the Federal Reserve. I laid out in detail how the Fed's policies have enriched the top .1% at the expense of everyone else in Want to Reduce Income/Wealth Inequality? Abolish the Engine of Inequality, the Federal Reserve (January 28, 2014)This boils down to the Cantillion Effect: new money is injected into the economy at specific points, creating winners and losers. Those with access to the new money (in the Federal Reserve's policies, those with financial power) gain immensely and everyone far from the free-money spigot loses purchasing power.There's no mystery here: if trillions of dollars are available at near-zero interest rates to those at the top of the pyramid, they will benefit accordingly.This chart shows how access to the Fed's free-money spigot causes the very top layer of owners of capital to outpace their less-wealthy peers: while the top 10% has outpaced the bottom 90% and the top 1% has outpaced the top 10%, the real action is at the very pinnacle of wealth holders: the top .1% has outpaced the 1%, and the top .01% has outpaced the .1%.Were the Fed abolished, the top holders of financial wealth would no longer have access to unlimited sums of free money, and the asset bubbles that are the essential engines of wealth inequality would all collapse, along with the vast majority of the top holders' phantom wealth.The collapse of asset valuations would impact middle-class holders of IRAs, 401Ks and pension funds invested in asset bubbles, but the real losers would be those at the top who own most of the phantom financial wealth.2. Eliminate the 6.2% Social Security payroll tax paid by employees and employers, and print the money to pay Social Security benefits in the Treasury. I described this solution in How About Ending Social Security and Paying Retirees with Cash? (November 15, 2013).The basic idea is this: rather than borrow money into existence via the Federal Reserve, abolish the Fed and print the new money directly. There is no interest to be paid on this new money, and so the financial parasites have nothing to gain from its creation.This would wipe out the most regressive tax on the working poor, and benefit all employers. Each currently pay 6.2% of wages, so eliminating Social Security taxes would give every worker an immediate 6.2% raise and every employer a 6.2% reduction in labor overhead. (The 1.45% Medicare tax each pays would remain in place.)The newly issued $800 billion a year would flow directly into tens of millions of individuals' accounts, where the the majority of it will be spent in the real economy.As for those who claim creating $800 billion a year would spark runaway inflation: the Fed has printed over $3 trillion in the past five years, and inflation is mostly a result of asset bubbles and cartel pricing (sickcare, college tuition, F-35 aircraft, etc.), not new money.Abolishing the Fed would trigger a deflationary collapse of asset bubbles. Printing $800 billion and distributing it to tens of millions of households would only counter some of this deflationary wave. The $800 billion annual distribution is simply too small to create inflation in a $16 trillion economy that is undergoing a cleansing of trillions of dollars in phantom wealth at the top of the wealth pyramid.3. Tax unearned income at much higher rates than earned income. The vast majority of the New Nobility's income is unearned income from rents, interest, dividends and capital gains. Taxing unearned income is in effect a wealth tax because only those who own income-producing assets have unearned income.It would be easy to set up a simple tiered tax structure that reduces income taxes for households with less than $250,000 annual earned income and offsets that reduction by raising the tax on unearned income above some level that enables small entrepreneurs and middle-class households to accumulate capital--for example, unearned income such as interest, dividends and capital gains would be taxed at the same rate as earned income up to $100,000 and then rises to much higher rates above that level.There is nothing fancy about these three solutions. They shift the incentives away from speculation to earned income/productive work, they lower regressive taxes on the middle class and working poor and they do not restrain legitimate enterprise and wealth accumulation. They eliminate complex systems (the Federal Reserve and the tax code) and put money in the hands of tens of millions of households rather then the top .1%.Yes, they are utopian, but only because we keep electing the same bought-and-paid-for Demopublican lapdogs of the super-wealthy and vested interests.

Join me on May 2 for the Sonoma Wine Country Conference: Investment Ideas Hidden In Plain Sight: great speakers, good cause (benefits Autism Society of America):

Get a Job, Build a Real Career and Defy a Bewildering Economy(Kindle, $9.95)(print, $20)Are you like me?Ever since my first summer job decades ago, I've been chasing financial security. Not win-the-lottery, Bill Gates riches (although it would be nice!), but simply a feeling of financial control. I want my financial worries to if not disappear at least be manageable and comprehensible.

And like most of you, the way I've moved toward my goal has always hinged not just on having a job but a career.

You don't have to be a financial blogger to know that "having a job" and "having a career" do not mean the same thing today as they did when I first started swinging a hammer for a paycheck.

Even the basic concept "getting a job" has changed so radically that jobs--getting and keeping them, and the perceived lack of them--is the number one financial topic among friends, family and for that matter, complete strangers.

"I want to thank you for creating your book Get a Job, Build a Real Career and Defy a Bewildering Economy. It is rare to find a person with a mind like yours, who can take a holistic systems view of things without being captured by specific perspectives or agendas. Your contribution to humanity is much appreciated."Laura Y.

Thank you, Daniel S. ($5/month), for your supremely generous re-subscription to this site -- I am greatly honored by your steadfast support and readership.

Thank you, Daniel E. ($5.55), for your most generous contribution to this site -- I am greatly honored by your steadfast support and readership.

Monday, April 28, 2014

Eight of the nine classes are hidebound by conventions, neofeudal and neocolonial arrangements and a variety of false choices.There are many ways to slice and dice America's power/wealth hierarchy. The conventional class structure is divided along the lines of income, i.e. the wealthy, upper middle class, middle class, lower middle class and the poor.I've suggested that a more useful scheme is to view America through the lens not just of income but of political power and state dependency, as a Three-and-a-Half Class Society(October 22, 2012):

The three-and-a-half class society is comprised of: the "entrenched incumbents" on top (the "half class"), the high-earners who pay most of the taxes (the first class), the working poor who pay Social Security payroll taxes and sales taxes (the second class), and State dependents who pay nothing (the third class).

This class structure has political ramifications. In effect, those paying most of the tax are in a pressure cooker: the lid is sealed by the "entrenched incumbents" on top, and the fire beneath is the Central State's insatiable need for more tax revenues to support the entrenched incumbents and its growing army of dependents.

A recent Foreign Policy article on China's New Class Hierarchy: A Guide inspired me to assemble America's nine classes.1. The Deep State. Mike Lofgren offered this description of the Deep State in Anatomy of the Deep State:The Deep State is a hybrid association of elements of government and parts of top-level finance and industry that is effectively able to govern the nation without reference to the consent of the governed as expressed through the formal political process.I describe the U.S. Deep State as the National Security State which enables a vast Imperial structure that incorporates hard and soft power--military, diplomatic, intelligence, finance, commercial, energy, media, higher education--in a system of global dominance.The key feature of the Deep State is that it makes decisions behind closed doors that the surface government ratifies and implements.The number of people in the Deep State class is small: senior Federal officials (NSA, Pentagon, State, Treasury, etc.), Executive Branch officials and key private-sector players.Membership in the Deep State class is not dependent on wealth so much as on relationships and power.2. The Oligarchs. Oligarchy is in the news--for example We're Headed for Oligarchy--and a number of descriptors are somewhat interchangeable: corporatocracy, plutocracy, etc. I have used Financial Aristocracy to invoke the neofeudal structure of our economy.Whatever word you prefer, this small class is more or less the top .01% who owns a majority of the nation's financial wealth. They essentially own the political machinery of the nation, writing the rules of legislation that is supposedly regulating their industries, taxes, etc.3. New Nobility. This is the super-wealthy class just below the Oligarchs. They own a singificant percentage of all assets but do not directly manage the political process like the Oligarch class. They hire lobbyists to protect their interests and constitute an influential political-financial class with global connections.4. Upper Caste. I use this term to describe the technocrat/professional class that manages the Status Quo for the upper classes. They serve in both government and the private sector.5. State Nomenklatura. In the Soviet Union, the Nomenklatura were the key administrators in all sectors. In the U.S., the Nomenklatura are well-paid government administrators with security and power. Collectively, they administer their own share of the swag, gaming the system to maximize their pensions, benefits, etc.Together, the Upper Caste and the Nomenklatura comprise about 9% of the 121 million households in the U.S.: roughly 8.7 million households who earn between $145,000 and $250,000 annually. This class is the bulk of the top 7%, i.e. the top 90% to 97%.Household income in the United States.The top level of the Upper Caste (2.8 million households) earns more than $250,000 annually. The Nomenklatura and Upper Caste number in total about 11.5 million households.6. The Middle Class. While others attempt to define the middle class by income alone (many see a household income of around $50,000 as qualifying), I define the middle class not by income alone but by purchasing power, benefits and assets owned.What Does It Take To Be Middle Class? (December 5, 2013).By this definition, the middle class is the cohort between 70% and 90%--households earning $80,000 or more. Even this is problematic, because in high-cost cities $80,000 is not enough to sustain middle-class conventions (owning a home, two vehicles, etc.) while it may be ample in lower-cost regions.This 20% comprises about 24 million households.The lower middle class--what I define as having some but not all of the attributes of full middle class membership--is the cohort between 50% and 70%--households earning more than $55,000 annually.This class also comprises about 20% (24 million) of all households.If you think this is too restrictive, please read my above analysis of middle class membership. It may change your view of what constitutes middle-class.7. The Working Poor. Roughly 38 million households have earned income but it is not sufficient to secure the basics of middle class life. Many qualify for social welfare programs such as food stamps and Medicaid.This class is about 30% of all households.8. State Dependents. Though often labeled "poor," those with minimal legal employment may be living better than the working poor, due to generous social welfare benefits such as Section 8 (housing), Medicaid (healthcare), child care, food stamps, disability, etc., and black-market sources of cash income. This class is comprised of the bottom 20% of households.9. Mobile Creatives. This is an emerging class that ranges across many income classifications and thus cannot be described by income alone. Some earn Upper Caste incomes, others are Working Poor. This class is self-employed, free-lance, entrepreneural, sole proprietors with adaptive skills. They may collaborate with other Creatives rather than have employees, and may have part-time jobs.There are roughly 5.5 million incorporated self-employed people in the U.S.; these tend to be professionals such as attorneys, engineers and physicians. These self-employed are generally members of the Upper Caste.The Mobile Creatives (which include small farmers, craftspeople, independent programmers, etc.) number around 10 million, or 8% of the workforce. I use the word mobile here not to suggest mobility between physical places (though that is one factor in this class's flexibility) but mobility between sectors and ways of earning income.Members of this class might take a short-term paying gig if the pay and circumstance is attractive, and then return to self-employment. They tend to foster multiple income streams and in general operate by the principle trust the network, not the corporation or the state.Some members of this class joined the cohort involuntarily, as the result of layoffs; others pursue this livelihood for its freedom, flexibility (important to parents of young children or those caring for elderly parents) and potential for self-expression.This is the "wild card" class that falls outside all conventional class/income hierarchies. It includes those seeking outlier wealth and those who have chosen voluntary poverty.Though this class wields little conventional financial or political power, it has a potentially large leadership role in social and technical innovations. This is the 4% Pareto Distribution that can exert outsized influence on the 64%.The other eight classes are hidebound by conventions, neofeudal and neocolonial arrangements and a variety of false choices and illusions of choice, including democracy itself.I will end this examination of the Nine Classes of America with this question: which class is having more fun? Your answer may say more about your aspirations and worldview than the class hierarchy itself.

Join me on May 2 for the Sonoma Wine Country Conference: Investment Ideas Hidden In Plain Sight: great speakers, good cause (benefits Autism Society of America):

Get a Job, Build a Real Career and Defy a Bewildering Economy(Kindle, $9.95)(print, $20)Are you like me?Ever since my first summer job decades ago, I've been chasing financial security. Not win-the-lottery, Bill Gates riches (although it would be nice!), but simply a feeling of financial control. I want my financial worries to if not disappear at least be manageable and comprehensible.

And like most of you, the way I've moved toward my goal has always hinged not just on having a job but a career.

You don't have to be a financial blogger to know that "having a job" and "having a career" do not mean the same thing today as they did when I first started swinging a hammer for a paycheck.

Even the basic concept "getting a job" has changed so radically that jobs--getting and keeping them, and the perceived lack of them--is the number one financial topic among friends, family and for that matter, complete strangers.

"I want to thank you for creating your book Get a Job, Build a Real Career and Defy a Bewildering Economy. It is rare to find a person with a mind like yours, who can take a holistic systems view of things without being captured by specific perspectives or agendas. Your contribution to humanity is much appreciated."Laura Y.

Thank you, Raoul K. ($50), for your supremely generous contribution to this site -- I am greatly honored by your support and readership.

Thank you, Vivian C. ($50), for your magnificently generous contribution to this site -- I am greatly honored by your support and readership.

Sunday, April 27, 2014

The real problem with Piketty's taxation/social welfare solution to wealth inequality is that it does nothing to change the source of systemic inequality, debt-based neofeudalism and neocolonialism.Those of us concerned by widening wealth/income inequality have been following the work of Thomas Piketty and Emmanuel Saez for many years. I've cited their analysis many times; for example: Two Americas: The Gap Between the Top 5% and the Bottom 95% Widens (August 18, 2010).Thomas Piketty has taken his meticulous research and turned it into a book, Capital in the Twenty-First Century, that has catalyzed the discussion of widening inequality by essentially proving that capital expands at rates far above the overall economy and wages. Since capital grows much faster than wages or the underlying economy, the gap between earned income and unearned income (rents) widens, along with the net worth of those who own capital and those who own little to no capital.Here is a chart from his work with Saez, showing how the top 10% has pulled away from the bottom 90%:This chart shows how the income of the bottom 90% has been stagnant for 40 years:This chart shows how capital's growth rate causes the very top layer of owners of capital to outpace their less-wealthy peers: the top 10% have outpaced the bottom 90%, the top 1% has outpaced the top 10%, the top .1% has outpaced the 1%, and the top .01% has outpaced the .1%.As other reviewers have noted, Piketty's book is not a theoretical critique of capitalism, it is a data-driven exploration of how present-day capitalism drives wealth inequality. Piketty's solution to widening inequality is a global wealth tax, a solution he characterizes as utopian, for getting the world's nations to eradicate tax havens is close to impossible.I would go further and say it is impossible within the U.S., never mind the world, as the top .1% own the political machinery. Why would anyone who owns the political process agree to tax themselves?As a result, any wealth tax will fall not on the super-wealthy with billions of dollars of unearned rentier income but on the upper-middle class who worked, saved and invested to build a nestegg. In other words, a wealth tax will fall on the same tax donkeys who are already paying the majority of income taxes.If I have contributed anything to the wealth inequality issue, it is the proposition that we live in a neofeudal, neocolonial economy (the New Feudalism), ruled by a New Nobility. In my analysis, neofeudalism arises from these characteristics:1. Debt is the enforcement mechanism of feudal fealty. Debtors--those with mortgages, student loans, vehicle loans, credit card balances, etc.--are obligated to fund the rentier income of their financial masters, the New Nobility. This is the essence of a feudal arrangement.Others have different definitions of neofeudalism.In my analysis, the rise of neofeudalism is a direct consequence of the financialization of the economy, in which essential assets (homes, for example) and processes are commoditized into financial instruments that can be sold, leveraged, pyramided and traded globally. Once an asset or process has been commoditized, it loses all connection to individuals, communities, companies or nations: it is the perfection ofrootless capital, free to be bought and sold anywhere, any time, with no connection to the real world other than a chain of claims.2. Society and the economy are organized so only the wealthy do not need to go into debt, which is serfdom in a neofeudal arrangement. The illusion of choice is thus maintained, a sibling of the illusion of democracy in which both party candidates are in thrall to the New Nobility.The fiendishly Orwellian brilliance of neofedualism is this: present-day serfs opt into serfdom, just as free citizens opted into the protection of feudal lords' estates as the Roman Empire crumbled around them. It was a false choice; remain free and face ruinous taxes, or choose serfdom on a lord's estate. The present economy offers an equivalent false choice for all but the most dedicated, disciplined few who reject debt by rejecting consumerism, "growth" and the endless spew of neofeudal propaganda.Want a college education? You freely choose the servitude of debt.Want a house? You freely choose the servitude of debt.Want a new vehicle? You freely choose the servitude of debt.Neocolonialism is tightly bound to neofeudalism in my model.3. The essence of neocolonialism is the "company store," which extends credit that can never be paid off as wages are stagnant. In a neocolonial economy in which only the top Caste of Managers, Technocrats and Professionals (the top 10%) can expand their income and wealth, debt-serfs are impoverished by servicing debt. As the real (inflation-adjusted) incomes of the bottom 90% decline or stagnate, debt service consumes an increasing amount of disposable earned income.Debt service is guaranteed in the neocolonial model. In the old colonial model, marginalized populations were recruited to work on plantations with the false promise of wages, which never quite exceed the cost of servicing debt.This arrangement was much neater than slavery, as the marginalized need not be bought: they freely choose their servitude. Beneath this supposed free will is of course a false choice: there is no other way to earn cash income other than working on the debt-plantation.In the old colonial model, only those ethnicities with an iron passion for saving regardless of income (for example, the Chinese, among others), were able to accumulate enough capital to escape the debt-bondage and establish small businesses.I explain the basic structure of neofeudalism and the neocolonialism in The E.U., Neofeudalism and the Neocolonial-Financialization Model (May 24, 2012)The problem with Piketty's solution to the intrinsic inequalities created by financialization, neofeudalism and neocolonialism is the super-wealthy might well agree to tax those beneath them, just to prop up the arrangement that benefits them so mightily. I can easily foresee a political movement, secretly funded by the New Nobility, that taxes all wealth above $1 million, but which magically excludes wealth-holders that just happen to be the top .1%.The New Nobility might even agree to pay a modest wealth tax, which would fund millions more recipients of food stamps, Section 8 housing and other social welfare, in effect institutionalizing neofeudalism and neocolonialism by rendering the unemployed complicit in the arrangement.If you owned $100 million, and were earning $5 million in rentier income annually, wouldn't you agree to a $1 million tax to fund social welfare programs that kept the rabble sedated with bread and circuses? It's a no-brainer.The real problem with Piketty's taxation/social welfare solution to wealth inequality is that it does nothing to change the source of systemic inequality, debt-based neofeudalism and neocolonialism. Simply raising more taxes to fund more social welfare programs leaves the unjust, rapacious, and ultimately destabilizing Status Quo entirely intact.I have laid out another path in my books: refuse serfdom, abandon participation in neofeudalism and neocolonialism, and build parallel systems of cooperation and wealth-building that are not debt-dependent.

Join me on May 2 for the Sonoma Wine Country Conference: Investment Ideas Hidden In Plain Sight: great speakers, good cause (benefits Autism Society of America):<

Get a Job, Build a Real Career and Defy a Bewildering Economy(Kindle, $9.95)(print, $20)Are you like me?Ever since my first summer job decades ago, I've been chasing financial security. Not win-the-lottery, Bill Gates riches (although it would be nice!), but simply a feeling of financial control. I want my financial worries to if not disappear at least be manageable and comprehensible.

And like most of you, the way I've moved toward my goal has always hinged not just on having a job but a career.

You don't have to be a financial blogger to know that "having a job" and "having a career" do not mean the same thing today as they did when I first started swinging a hammer for a paycheck.

Even the basic concept "getting a job" has changed so radically that jobs--getting and keeping them, and the perceived lack of them--is the number one financial topic among friends, family and for that matter, complete strangers.

"I want to thank you for creating your book Get a Job, Build a Real Career and Defy a Bewildering Economy. It is rare to find a person with a mind like yours, who can take a holistic systems view of things without being captured by specific perspectives or agendas. Your contribution to humanity is much appreciated."Laura Y.

Thank you, Ray W. ($50), for your magnificently generous contribution to this site -- I am greatly honored by your steadfast support and readership.

Thank you, Randy W. ($50), for your outstandingly generous contribution to this site -- I am greatly honored by your support and readership.

Saturday, April 26, 2014

Class warfare reflects a dysfunctional divide-and-conquer society.One of the easiest ways to put someone on the defensive in America is to accuse him/her of being an elitist. The power of this accusation derives from a complex mix of dynamics. At least one goes all the way back to the founding principles of the nation: a profound and abiding distrust of monarchy and landed nobility, and a well-grounded fear that democracy could be subverted and a new form of feudal monarchy returned to power.It is increasingly clear that a new form of feudalism has indeed subverted democracy, and that the New Feudalism is powered by concentrations of private wealth and centralized state control: what I call the New Nobility.Recall my Feudalism Corollary #1:

If the citizenry cannot replace a dysfunctional government and/or limit the power of the financial Aristocracy at the ballot box, the nation is a democracy in name only.

This is why politicians bred in the hothouses of elite universities must perform "I'm one of you" rituals such as publicly enjoying low-brow snack food and attending mid-brow music performances. That such transparent immunizations against charges of elitism still work is testament to the credulity of a media-soaked populace.There is an uglier aspect to the accusatory power of charges of elitism: as the sense that hard work and integrity are no longer guarantees of upward mobility in America, a corrosive class envy is coming to a boil.This is the subtext of the emergent topic of the day, wealth and income inequality.Since the vast majority of us cannot lash out in any satisfying way at the top .01% who own most of the wealth and control the political machinery--in other words, the New Nobility--we seek some other accessible target.Expressing anger at the representatives of authority--police, Homeland Security, etc.--is a risky proposition, as being beaten and hauled off to jail or being shot are distinct possibilities.Beyond the overwhelming use of raw force, authorities maintain an arsenal of soft weapons such as false public accusations, vague legal charges that keep morphing as the accused demolishes each specific charge, IRS audits, and so on.This rage at the dominance of essentially feudal elites and their armies of underlings willing to enforce their rule is increasingly being directed at the elected toadies and lackeys. In response, craven politicos are restricting their exposure to angry serfs.That leaves the top 10% as the only accessible target for class envy and the generalized rage of a peasantry that cannot identify the causes of their servitude.This is misdirection, of course; the top 10% of professionals and technocrats have benefited within the New Feudalism, but they are functionaries, not the New Nobility.It's clear that the top 10%--the class of technocrats, professionals, entrepreneurs and creatives--has managed to increase their wealth despite the dominance of the top .01%, whose wealth and power has pulled away from the top 10% and even the top 1%.The Richest Rich Are in a Class by Themselves: top .01% and top .1%The top 5% has done marginally better than the top 10%, and the top 20% have done better than the bottom 80%:A household income of around $150,000 a year qualifies as a top 10% income:$145,000 to $149,999: 90.20%$105,000 to $109,999: 81.09%$190,000 to $194,999: 95.21%Because the super-wealthy are in the top 5% and top 1%, the average incomes of these groups are heavily skewed by the enormous incomes of the top 01%. As a result, it would be more accurate to remove the top .1% from the top 10%, top 5% and top 1%, but I haven't found any statistical charts that reflect this.For their part, the top 10%/5% are feeling unfairly targeted by this class envy, as they pay the vast majority of income taxes:CBO:Top 40% Paid 106.2% of Income Taxes; Bottom 40% Paid -9.1%The Distribution of Household Income and Federal TaxesWhile inherited wealth plays a part in the top .1%, most of the top 10%/5% have earned their wealth the old-fashioned way, by obtaining professional degrees or starting businesses, and by being married/having two incomes: Explaining income inequality by household demographics.Rather than being "the enemy," the top 10% feels they're the good guys, the ones providing jobs and paying most of the taxes that support the bottom 40%. While the bottom 90% focuses on their own set of resentments, the top 10% have their own resentments: the public services they pay for are often marginal or poor quality.This reality is fueling a movement of wealthier communities to incorporate into new cities that are operated for the benefit of their residents: services are run more like businesses than spoils systems (the default model of large urban cities), taxes are kept low and feedback from taxpayers keeps service quality high.I have covered the various class fault lines emerging in America many times:The Three-and-a-Half Class Society (October 22, 2012)The New Feudalism a partnership of the Tyranny of the Majority, entrenched incumbents and the top .1% Elites. If the political Status Quo alienates the majority by making them pay more taxes, they risk losing power in the next election. If they alienate the top .1% who fund their multi-million-dollar campaigns, then they will also lose power. So they heap the tax burden on what remains of the middle class.There is a social dimension to this emerging class warfare, a topic I discuss in Bifurcation Nation (June 24, 2013). The top 20% is characterized not just by wealth but by a set of cultural behaviors, values and norms that are increasingly divergent from the norms and behaviors of the bottom 80%.The haves are married, have college degrees, rarely have military service, attend religious services, and have little contact with those outside their own upper-middle class.The have-nots are divorced/single parents, less educated, more likely to have served in the military, less likely to attend church, and earn much less than the haves.I myself am routinely accused of being elitist, on the grounds that few can afford the meals I present here. I have repeatedly proven this assertion to be absolutely false, as home-cooked meals are cheaper than fast-food "value meals" or packaged convenience food. America's Excuse Book: Take Your Choice, Victim or Heartless Hypocrite (December 2, 2013)These accusations are especially irksome because I have been low-income for most of my adult life and have carried far too much lumber on far too many jobsites to tolerate any accusations of elitism. I suspect many others routinely accused of elitism feel the same way.The urge to accuse everyone with something better than you have of being part of an exploitive elite reflects not just generalized rage but the victory of victimhood. Sadly, one of the few ways for the marginalized in our society and economy to "get ahead" is to make claims of victimhood to secure disability, social services, etc. The core of victimhood is "it's not my fault." The system rewards victimhood, so it's no surprise that has become a dominant social norm.And where does this set of norms lead us? To a dysfunctional divide-and-conquer society in which the top 10% paying most of the taxes is increasingly resentful of the .1% New Nobility above them and the masses below that look at the 10% as the only accessible target of their generalized anger at the injustice of their servitude and powerlessness.The top .1% New Nobility, which of course includes all the craven politicos in thrall to the super-wealthy, have the means to sequester themselves away in gated estates and private jets. No wonder the top 10% is actively pursuing whatever means are available to avoid the resentments of those below.Meanwhile, those running the mainstream media and the machinery of governance have to generate targets for the generalized rage other than the actual sources of dysfunction: the centralized state itself and the private concentrations of capital that partner with the state's elites in the New Nobility.

Join me on May 2 for the Sonoma Wine Country Conference: Investment Ideas Hidden In Plain Sight: great speakers, good cause (benefits Autism Society of America):

Get a Job, Build a Real Career and Defy a Bewildering Economy(Kindle, $9.95)(print, $20)Are you like me?Ever since my first summer job decades ago, I've been chasing financial security. Not win-the-lottery, Bill Gates riches (although it would be nice!), but simply a feeling of financial control. I want my financial worries to if not disappear at least be manageable and comprehensible.

And like most of you, the way I've moved toward my goal has always hinged not just on having a job but a career.

You don't have to be a financial blogger to know that "having a job" and "having a career" do not mean the same thing today as they did when I first started swinging a hammer for a paycheck.

Even the basic concept "getting a job" has changed so radically that jobs--getting and keeping them, and the perceived lack of them--is the number one financial topic among friends, family and for that matter, complete strangers.

"I want to thank you for creating your book Get a Job, Build a Real Career and Defy a Bewildering Economy. It is rare to find a person with a mind like yours, who can take a holistic systems view of things without being captured by specific perspectives or agendas. Your contribution to humanity is much appreciated."Laura Y.

Thank you, Don J. ($50), for your splendidly generous contribution to this site -- I am greatly honored by your steadfast support and readership.

Thank you, Sharon J. ($50), for your supremely generous contribution to this site -- I am greatly honored by your longstanding support and readership.

Thursday, April 24, 2014

Priced in gold and stocks, wheat is near multi-decade lows. That may not last.Measuring the cost of anything in currency can be misleading. As we know, inflation can be gamed by authorities to appear low, and supposedly low inflation is actually high inflation if wages are declining while prices rise.Longtime correspondent Harun I. has often recommended in these pages that we look to other yardsticks to get a more realistic assessment of price and value.For example, what is the cost of wheat when priced in gold rather than dollars? Harun has graciously provided a chart of the wheat/gold ratio, which I marked up to identify when gold was expensive and wheat was cheap, and vice versa.Priced in gold, wheat is at multi-decade lows; technically, this long downtrend appears to have reversed into an uptrend. If this is so, the only direction in the price of wheat (priced in gold) is up.Here is wheat priced in the Dow Jones Industrial Average (DJIA). In essence, how many bushels of wheat can be purchased with one share of the Dow index?In 1975, at the nadir of the stagflation-ridden stock market, wheat was expensive and the Dow cheap--once again, this is pricing wheat in the Dow, not the dollar.At the top of the stock market bubble in 2000, the Dow was expensive and wheat was cheap.When the Dow hit bottom in March 2009, wheat went up when priced in stock market shares.Despite some impressive volatility since 2000, the trend in the price of wheat (when priced in stocks) is clearly up. Once again, it seems a long-term downtrend in the price of wheat has reversed and is now an uptrend.The only way for wheat to regain its previous trading range is for gold and the Dow to both plummet or for wheat to rise in cost, i.e. it takes more gold or shares of the Dow to buy a bushel of wheat.Priced in gold and stocks, wheat is near multi-decade lows. That may not last.Technically the trend has reversed, suggesting much higher prices--in dollars, gold or stocks--for wheat and indeed, by extension, for all food.We may be tasting the first minimal increases in food prices that could soar to unimagined heights in the years ahead.

Join me on May 2 for the Sonoma Wine Country Conference: Investment Ideas Hidden In Plain Sight: great speakers, good cause (benefits Autism Society of America):

Get a Job, Build a Real Career and Defy a Bewildering Economy(Kindle, $9.95)(print, $20)Are you like me?Ever since my first summer job decades ago, I've been chasing financial security. Not win-the-lottery, Bill Gates riches (although it would be nice!), but simply a feeling of financial control. I want my financial worries to if not disappear at least be manageable and comprehensible.And like most of you, the way I've moved toward my goal has always hinged not just on having a job but a career.

You don't have to be a financial blogger to know that "having a job" and "having a career" do not mean the same thing today as they did when I first started swinging a hammer for a paycheck.

Even the basic concept "getting a job" has changed so radically that jobs--getting and keeping them, and the perceived lack of them--is the number one financial topic among friends, family and for that matter, complete strangers.

"I want to thank you for creating your book Get a Job, Build a Real Career and Defy a Bewildering Economy. It is rare to find a person with a mind like yours, who can take a holistic systems view of things without being captured by specific perspectives or agendas. Your contribution to humanity is much appreciated."Laura Y.

Thank you, Karsten O. ($75), for your outrageously generous contribution to this site -- I am greatly honored by your steadfast support and readership.

Thank you, William S. ($50), for your supremely generous contribution to this site -- I am greatly honored by your longstanding support and readership.

Wednesday, April 23, 2014

When we compete against ourselves, who sets the standards? We do, of course. We set the minimum standards and the goals.One practical rule of fitness is to compete against yourself rather than against others. You're less likely to push yourself to the point of getting hurt when you compete only against yourself.But every once in a while it's useful to compare your core fitness against well-established standards. The standard I use is the Army Physical Fitness Test (APFT).The APFT is a three-event physical performance test used to assess endurance. It is a simple way to measure your physical strengths, abilities, and cardio-respiratory fitness.The three PFT events are two minutes of push-ups, two minutes of sit-ups, and a timed 2-mile run. Your results from each event are assigned a score. To pass you must Score 180 points or higher with at least 60 points in each event. Your age, gender and the amount of repetitions or time elapsed for each event determines your score.I wrote about the test in This Nation's Devolution from Quality to Convenience (January 4, 2010).I turned 60 in December 2013, and wondered how I'd score on the APFT with no special training, just my usual fitness routine. I had some free time this past Sunday so I did the three tests.I want to specify a few things about my typical training and how I took the test. I am not a gym rat and in fact never go to a gym. I don't lift weights or do any extraordinary training. I walk or bicycle every day, often as a means of doing errands, and I run two kilometers (1.2 miles) once or twice a week. I limit running to avoid pounding my knees too much; when I was a production carpenter/builder, I carried a lot of weight and various joints reflect that wear and tear.I do tai-chi/chi-gong type stretching and simple exercises like jumping jacks, and do sets of push-ups and sit-ups a few times a week. I do not do hours of strenuous exercise or push myself to the point of pain or passing out. Easy does it is my credo. I've seen too many people injure themselves by acting like they're still 25 years old. In other words, the key part of being an athlete is not competition against others--it's being aware of your own limits and being able to press up against that line on occasion without exceeding it.Once you're injured, then your fitness program is severely limited. So my Number One priority is to avoid injury.(If you have no fitness program, be sure to consult a doctor before starting any fitness routine. Get a comprehensive physical and baseline tests of blood pressure, cholesterol, fasting blood sugar, etc.)In taking the test, I did not push past my limits; I only did only what was comfortable. Test results where the person is exhausted and in recovery for days are not valid results in my view; the point is to test your fitness on an average day, not your maximum. That's especially true if you're older like me.Once again: do NOT attempt the APFT if you have no regular, sustained fitness program, and do not start a fitness program without consulting a physician who has access to your medical history and current records. Also, do not view the test as a competition against me or anyone else; it's only a baseline standard, not the Guinness Book of World Records. There is no prize awarded, other than fitness itself.Finally, remember that fitness, diet (eating a variety of home-prepared real food) and mental health are one system--they cannot be separated. Total fitness builds not just strength and endurance but health, mental fortitude and a sense of well-being.Push-UpsI did 50 push-ups, two sets of 25 with a brief pause in between. I finished in about 100 seconds and did not use the full 2 minutes, as there wasn't much left in the quiver after a quick 50.As for test scores, I used the tables for males of course: The minimum for Army Rangers is 49 push-ups, so I met that standard. For Army personnel ages 17-21, the minimum number of push-ups to get a passing score of 60 is 42. So my score was 71. For male personnel ages 37-41, the minimum is 34, so my score is 76.I don't have any illusions about my ability to meet all Ranger standards; carrying a full pack for miles and doing a 5-mile run in 40 minutes are well beyond my capabilities at 60 years of age. Nonetheless, it was fun to meet at least the push-up minimum: Army Ranger PFT.Sit-UpsI did 55 sit-ups in 2 minutes, and am annoyed that I didn't push myself a bit because I could have easily done another five and reached 60, meeting the standard for Army Rangers (59). For Army personnel ages 17-21, the minimum number of sit-ups to get a passing score of 60 is 53, so I passed for that age group with a score of 63. For male personnel ages 37-41, the minimum is 45, so my score is 71.2-Mile RunThe local high school track was closed on Sunday, so I ran a course I'd previously measured with my bicycle odometer. The course is not quite level and so the slight uphill part probably hurt my time. The distance may not be perfectly accurate, but I think it's quite close. Nonetheless there is a fudge-factor here due to the limitations of the street course.My time for the 2-mile run was 16:12, with a very consistent 4 minutes per half-mile over the course of the run.This is a minute off the Army Rangers minimum, and slightly under passing for Army personnel ages 17-21, where the minimum time needed for a passing score of 60 is 15:54. So my score was 56 for the 17-21 age group. Since we're talking about a measly 16 seconds here (4 seconds per half mile), I am sure I could have reduced my time by 20 seconds with a bit of extra effort.For male personnel ages 37-41, the minimum time needed to earn the passing score of 60 is 18:18, so in this age group my score is 78.A minute after the run, my pulse was around 70. My resting pulse is around 60. My blood pressure an hour later is usual for me, 124/73. In other words, I didn't push myself very hard to make 16:12, though this is a longer distance than my usual jog.Once again, my Number One priority is avoiding injury. I want to be jogging for many years to come, so I have to protect what's left of my joints. As an older athlete, this requires leaving my body time to recover (i.e. not running every day) and also staying lean so I'm not punishing my joints with extra body weight.My ScoreIn the 17-21 age group, my score is 190 (passing is 180). I missed the minimum score for the 2-minute run by a lousy 16 seconds, but my overall score is passing for people 40 years my junior.My score for the 37-41 age group, 20 years my junior, is 225 (passing is 180). I easily exceeded these standards with no special effort.I met the Army Rangers standards for push-ups and missed the sit-up minimum by four, something I am confident I could make up with a bit of effort. I missed the 2-mile run minimum by a minute, not something I could make up without some devoted training. Nonetheless, only a minute shy of Ranger standards isn't bad for a 60-year geezer.For baseline purposes, my weight this morning was 171.6 pounds, height 6-foot 2-inches, yielding a BMI (body mass index) of 22. My cholesterol (last tested in August 2013) is 190, triglycerides 57, HDL 54 and LDL 125. These are not stellar results, they're merely normal.So what's the point? Simply this: it isn't that difficult to be fit, folks. I am not a gifted athlete (just ask my buddies on my high school teams); if anything, my endurance, strength, skill, etc. is mediocre or even below average.I don't spend hours at the gym or training to meet some sort of crazy endurance/strength goals; I only do common-sense cross-training, and do errands on foot or on a bicycle. I do push-ups and sit-ups no more than twice a week, and this takes only a few minutes. I jog two klicks (Kilometers), around 1.2 miles once or twice a week. I bicycle around 25-30 miles a week.The lower we set our standards, the less we expect of ourselves. In a world of global competition, this isn't a strategy that improves the odds of success.When we compete against ourselves, who sets the standards? We do, of course. We set the minimum standards and the goals. If the goal is convenience, then we get results to match.Being fit isn't about meeting standards, it's about feeling good and being able to enjoy activities and meals, eating what you want, not what you're limited to. I chose the Army Physical Fitness Test to make the point that minimum fitness isn't that difficult to reach, even of you're 40, 50, 60 or older.The lower our standards and goals, the less we accomplish and the poorer the quality of our lives.

Next day report: I can feel the previous day's 50 push-ups a bit, but this is normal when you push up against your limits. This is actually the ideal in terms of building endurance and/or strength. I enjoyed my usual 2-klick morning walk and look forward to jumping on my bicycle later in the day. As far as I'm concerned, it's just another day of fitness routine.

Want to give an enduringly practical graduation gift? Then give my new book Get a Job, Build a Real Career and Defy a Bewildering Economy, a mere $9.95 for the Kindle ebook edition and $17.76 for the print edition.Join me on May 2 for the Sonoma Wine Country Conference: Investment Ideas Hidden In Plain Sight: great speakers, good cause (benefits Autism Society of America):

Get a Job, Build a Real Career and Defy a Bewildering Economy(Kindle, $9.95)(print, $20)Are you like me?Ever since my first summer job decades ago, I've been chasing financial security. Not win-the-lottery, Bill Gates riches (although it would be nice!), but simply a feeling of financial control. I want my financial worries to if not disappear at least be manageable and comprehensible.And like most of you, the way I've moved toward my goal has always hinged not just on having a job but a career.

You don't have to be a financial blogger to know that "having a job" and "having a career" do not mean the same thing today as they did when I first started swinging a hammer for a paycheck.

Even the basic concept "getting a job" has changed so radically that jobs--getting and keeping them, and the perceived lack of them--is the number one financial topic among friends, family and for that matter, complete strangers.

It details everything I've verified about employment and the economy, and lays out an action plan to get you employed.

I am proud of this book. It is the culmination of both my practical work experiences and my financial analysis, and it is a useful, practical, and clarifying read.

Test drive the first section and see for yourself. Kindle, $9.95print, $20"I want to thank you for creating your book Get a Job, Build a Real Career and Defy a Bewildering Economy. It is rare to find a person with a mind like yours, who can take a holistic systems view of things without being captured by specific perspectives or agendas. Your contribution to humanity is much appreciated." Laura Y.

Thank you, Harvey D. ($100), for your outrageously generous contribution to this site -- I am greatly honored by your steadfast support and readership.

Thank you, Helen S.C. ($5), for yet another sublimely generous contribution to this site -- I am greatly honored by your longstanding support and readership.

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